Foundries across South Korea launched another supply boycott on Monday (17 March), demanding more money for products they supply to car makers and other manufacturers.
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The Korea Foundry Cooperative Association threatened that the boycott – planned for three days – may lead to a complete halt in production, should their demand be ignored again, the Korea Herald reported.
“After our first protest (earlier this month), we have contacted major buyers, including Hyundai Motor, only to find a big gap in prices we request and they are willing to pay,” a KFCA official told the paper.
The foundry sector reportedly claims that there is almost no profit margin for them left at the current price, due to the recent rise in material prices – namely pig iron and steel strap.
According to the Korea Herald, Hyundai Motor appears to be the only firm that proposed increasing prices for suppliers; it proposed an increase of about 75 won per kilogram of steel strap, which is less than half of the 174 won that the foundries demand.
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By GlobalDataThe price of steel strap – a main material for cast-steel products – has jumped by 240 won per kilogram so far since last year, the KFCA claims.
A Hyundai Motor spokesman told the Korea Herald: “The proposal we made was the most of what we can possibly offer to suppliers as a company engaging in a cut-throat price competition.”
The paper noted that the supply boycott, the second of its kind this month, comes amid a growing outcry from small- and medium-sized companies supplying to big conglomerates to share the burden of rising material costs.
